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Concurrent Receipt of Military Retirement Pay and Veterans Disability


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									 HOUSE RESEARCH                                                            Short Subjects
Jim Cleary                                                                                        October 2011

                       Concurrent Receipt of
   Military Retirement Pay and Veterans Disability Compensation
Veterans may be eligible for military retirement pay, and if they are disabled, they may also be eligible for
veterans disability compensation. Federal law governs both military retirement pay and veterans disability
compensation, and determines the situations in which veterans can receive both. While only a small
percentage of veterans are military retirees, many military retirees have incurred one or more service-
connected disabilities and are affected by concurrent receipt policies. These issues are governed by federal
law and are not under the jurisdiction of the states. This short subject briefly explains each type of
compensation and the situations in which a veteran may be eligible to receive both.

 Veterans may be eligible     A military retiree (generally, a service member who serves 20 years or more
 for military retirement      in the military) typically qualifies for military retirement pay and certain other
 pay and veterans             veterans benefits. The amount of military retirement pay due a military
 disability compensation      retiree is based on a formula or scale that factors in the person’s military rank
                              at retirement and the person’s length of military service. Military retirement
                              pay is determined and paid by the U.S. Defense Finance and Accounting
                              Service (DFAS).
                              A disabled veteran may apply for disability compensation from the U.S.
                              Department of Veterans Affairs (VA). The VA can approve veterans as
                              eligible for veterans disability compensation for one or more documented
                              service-connected injuries or illnesses that continue to affect the person’s
                              health or abilities following separation from the military. The VA pays this
                              compensation, with the monthly amount based on a formula or scale that
                              factors in the person’s military rank and the person’s service-connected
                              disability rating. Service-connected disability ratings are made in 10 percent
                              increments from 0 percent to 100 percent, with a special category for
                              disabilities rated as 100 percent total and permanent. (Disabilities not related
                              to military service are not considered.)
 In most cases, veterans      “Concurrent receipt” refers to a veteran’s eligibility to receive both military
 cannot receive both          retirement benefits and VA disability compensation. Until 2004, concurrent
 retirement benefits and      receipt was prohibited by federal law, so a person receiving military
 disability compensation      retirement pay was required to waive some or all of that pay in order to
                              receive VA disability compensation. The federal law was changed as of
                              January 1, 2004, so that any military retiree with a VA disability rating of 50
                              percent or higher, or any Purple Heart medal recipient with a rating of 10
                              percent or higher, is eligible for full concurrent receipt of his or her military
                              retirement pay and veterans disability compensation.

                              However, the waiver is still the law for most military retirees with a VA
                              service-connected disability rating of less than 50 percent. This waiver of
                                 retirement pay for disability compensation causes a dollar-for-dollar offset.
                                 As a result, a military retiree subject to the federal ban on concurrent receipt
                                 is limited to the higher of: (1) the person’s military retirement pay; or (2) the
                                 person’s veterans disability compensation, but not to the sum of the two.

                                 The principal advantage of the waiver for the veteran is to substitute veterans
                                 disability pay, which is exempt from all taxation, for military retirement pay,
                                 which is subject to taxation.
 Congress expanded               Congress has continued to expand eligibility for concurrent receipt of
 eligibility for concurrent      retirement pay and disability compensation (CRDP) to include additional
 retirement and disability       populations of veterans. As of January 2011, the law allows concurrent
 pay                             receipt for the following groups:
                                 •   Military retirees who are 100 percent disabled with 20 years of service
                                 •   All combat-disabled military retirees regardless of length of service or
                                     percentage of disability as described below
                                 •   Disabled military retirees with 20 years of service who are deemed
                                     “unemployable” by the VA
                                 •   Chapter 61 retirees with 20 years of service, who have suffered combat or
                                     operations-related injuries, with partial benefits if under 20 years service
                                     (Chapter 61 retirees are people forced to retire from the military because
                                     of medical issues; see 10 U.S.C. §§ 1201-1222.)
                                 An estimated 300,000 disabled military retirees nationally currently qualify
                                 for concurrent receipt. This represents about 30 percent of the military
                                 disabled retired population.
 Some retirees can receive Combat-related special compensation (CRSC) is authorized in federal law
 compensation to replace and provides military retirees monthly compensation to replace a VA
 a disability offset       disability offset. Under this law, all qualified military retirees with 20 or
                           more years of service with a “combat-related” VA-rated disability are exempt
                           from any ban on concurrent receipt and are eligible to receive both full
                           military retirement pay and VA disability compensation.
 A portion of Minnesota          Minnesota has approximately 400,000 veterans; about 60,000 of them have a
 veterans are military           VA disability rating, but only about 15,000 are military retirees (including
 retirees                        both active duty and National Guard and other Reserve retirees). Many of
                                 these 15,000 military retirees are likely to have service-connected disabilities,
                                 as determined by the VA.

                                 Because these policies are governed by federal law, Minnesota has no
                                 jurisdiction or authority to change them.

For more information: Contact legislative analyst Jim Cleary at jim.cleary@house.mn.

The Research Department of the Minnesota House of Representatives is a nonpartisan office providing legislative,
legal, and information services to the entire House.

House Research Department  600 State Office Building  St. Paul, MN 55155  651-296-6753  www.house.mn/hrd/hrd.htm

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